The regulator said the nature of ADMISI’s business and client base presented potentially high levels of money laundering risk.

It said that was because of the firm’s business model, the geographical location of its customers, the proportion of its business involving high-risk clients and because it had had Politically Exposed Persons as clients. 

The FCA said it had raised concerns with ADMISI in 2014 about its anti-money laundering systems, including the absence of a formal process to classify customers by risk.

It had expected ADMISI to make improvements but found significant failings remained during a 2016 firm visit.

In particular it found the firm’s AML customer risk assessment was basic and did not enable an assessment of a customer’s financial crime risk. On top of that the FCA said it did not conduct a firm-wide money laundering risk assessment.

There was also little evidence of adequate on-going monitoring in the form of periodic customer reviews, while policies were outdated and referred to old legislation, the FCA said.

Things improved after the 2016 visit, the FCA said, and after further remedial action the requirements were lifted in January 2018.  

Therese Chambers, joint executive director of enforcement and market oversight, said: “All financial firms need to have effective anti-money laundering checks in place. ADM Investor Services’ failures put it at risk of being used to facilitate financial crime. These failings continued even after the firm had received clear warnings on the need to improve its systems.”

The firm did not dispute the FCA’s findings and exercised its right, under the FCA’s partly contested case process, to ask the FCA’s regulatory decisions committee to assess the appropriate level of penalty.

The firm’s agreement to accept the FCA’s findings meant it qualified for a 30% settlement discount. Otherwise, the FCA would have imposed a financial penalty of £9,243,738.

ADM Investor Services International Limited operates in the futures industry providing clearing and brokerage services into all major investment markets. Headquartered in London, it is a registered futures commission merchant which facilitates more than 180 million derivatives contracts a year on behalf of banks, institutional investors, corporates, trade clients, and high net worth individuals.